Canada’s Black Market to Control 71% of Marijuana Sales in 2019

The marijuana industry had itself a year in 2018 like none before it. Having entered the year as a still somewhat taboo topic, cannabis exited 2018 on solid ground. That’s because the industry was legitimized following the legalization of recreational pot in Canada on Oct. 17, 2018.

The passage of the Cannabis Act in June and the official kickoff of sales in October rolled out the red carpet (or dare I say “green” carpet) for the legal weed industry, which should result in billions of dollars in added annual sales by the early part of the upcoming decade. This legalization also signaled that the pot industry was here to stay and to welcome investors.

But in spite of Canada going green, the industry itself hasn’t exactly launched out of the gate as expected. Rather, it’s dealt with a series of logistical issues that have worked to constrain supply at a time when residents and tourists are eager to buy cannabis products.

Canada’s cannabis industry is facing a number of logistical challenges

Just hours after legal sales commenced in October, a dispensary in Winnipeg, Manitoba, ran out of product and had to shutter its doors. Supply issues have plagued practically every Canadian province at one point, and there’s no exact timetable on when supply will be sufficient to meet demand.

How, exactly, did the industry and regulators not foresee this coming? One problem is with Health Canada itself. The regulatory agency tasked with overseeing the legal weed industry is absolutely buried in cultivation license and sales permit applications. Back in May 2018, Marijuana Business Daily found that Health Canada had a backlog of more than 500 cultivation license applications and that sales permits were taking, on average, 341 days to be issued following the receipt of the application. Essentially, it’s taking more than a year to complete the process of getting approved to plant cannabis crops and then selling those crops.